Auto Component Manufacturers India: Component manufacturers steal the show on auto deal street


Indian auto component manufacturers have signed deals worth over ₹6,300 crore in the last three months. For the sake of comparison, India’s automotive sector was witness to mergers, acquisitions, and joint ventures worth ₹6,945 crore in 2022. Eight out of ten deals were in the auto component space last year, according to Grant Thornton estimates.

As electrification catches pace in the world’s third largest auto market amid changing strategies of multinational companies, the deal Street in India is only going to get busier, say investment bankers and those in the transaction advisory business. “We expect multinationals to continue divesting non-core businesses in India and focus on more technology-oriented and profitable segments,” says Koushik Bhattacharyya, head, industrials investment banking, Avendus Capital.

Global majors Faurecia, DR Axion, and IAC (International Automotive Components) sold some of their India operations in the last 2-3 months. Bhattacharyya expects such divestments to continue this year as “strategy realignment” happens at a global level. “This provides a great opportunity for domestic groups to acquire high-quality assets and new customer relationships at reasonable valuations,” he said.

Deals ranging from Samvardhana Motherson International’s (SAMIL) acquisition of SAS Autosystemtechnik and Saddles International, which accounted for the bulk of the deal value, to the majority buyout by Lumax Auto Technologies of IAC’s India business, are a reflection of the rapid changes – a shift in buyer’s preference for higher-end vehicles, shift to electrics, and upcoming regulations.

Saket Mehra, national sector leader, automotive at Grant Thornton, says that in addition to the traditional investments aimed at achieving economies of scale and wider customer base, “The deal activity in the short-to-medium term is expected to focus on electrification, primarily governed by battery-as-a-service, safety systems, digital technologies to enhance consumer experience and optimise supply chains.”

The propensity among the automakers to source the sub-assemblies and modules as compared to sourcing individual parts is also driving the current spate of acquisitions, says Anmol Jain, managing director, Lumax Auto Technologies.

The partnership with IAC in which Lumax has a majority stake will help the firm in moving up the value chain in the company’s core business of plastic parts. It will also help in diversifying the customer base from the two-wheelers to passenger vehicles – a segment that has seen a lot of traction for premium vehicles since the last couple of years, he said.For Motherson Group that has acquisition intrinsic to its growth strategy, the buyout of SAS, which specialises in assembly, automation, and logistics, will help the diversified conglomerate of auto parts claim a global leadership position in assembling cockpit modules, with special focus on EVs. “We are investing in things which are synergistic with our current business,” Pankaj Mittal, chief operating officer, Samvardhana Group told ET.

SAMIL also acquired Saddles International which is into premium upholstery. With cars getting more and more enriched in interiors, wrapped door trims, ventilated seats becoming a standard feature in the variants, the buyout is a strategic fit for the company, said Mittal.

The upcoming regulation around the airbags is likely to disrupt the market of seat cover and it is set to get organised, he stated.


In the graphic accompanying the above report ‘Parts Makers Steal the Show on Auto Deal Street’ published on March 6, it was incorrectly stated that the product lines acquired by TAFE from Faurecia comprise seating interiors, clean mobility and electronics. The business acquired by TAFE from Faurecia relates only to its interiors division and does not relate to seating, clean mobility or electronics, which continue to be with Faurecia. The error is regretted.



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